Altimmune, Inc. (NASDAQ:ALT) Q4 2022 Earnings Call Transcript

Altimmune, Inc. (NASDAQ:ALT) Q4 2022 Earnings Call Transcript February 28, 2023

Operator: Good day ladies and gentlemen, and welcome to the Altimmune Inc. full year and fourth quarter 2022 financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. To ask a question during this session, you will need to press star-one-one on your telephone. As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference call, Rich Eisenstadt, Chief Financial Officer of Altimmune. Rich, you may begin.

Richard Eisenstadt: Thank you Gigi, and good morning everyone. Thank you for participating in Altimmune’s full year and fourth quarter 2022 financial results and business update conference call. Members of Altimmune team joining me on the call today are Vipin Garg, our Chief Executive Officer, Scot Roberts, our Chief Scientific Officer, and Scott Harris, our Chief Medical Officer. Following the prepared remarks, we will hold a question and answer session. A press release with our full year and fourth quarter 2022 financial results was issued this morning and can be found on the Investor Relations section of the company’s website. Before we begin, I would like to remind everyone that remarks about future expectations, plans and prospects constitute forward-looking statements for purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Altimmune cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated. For a discussion of some of the risks and factors that could affect the company’s future results and operations, please see the Risk Factors and other cautionary statements contained in the company’s filings with the SEC. I would also direct you to read the forward-looking statements disclaimer in our press release issued this morning and now available on our website. Any statements made on this conference call speak only as of today’s date, Tuesday, February 28, 2023, and the company does not undertake any obligation to update any of these forward-looking statements to reflect events or circumstances that occur on or after today’s date.

As a reminder, this conference call is being recorded and will be available for audio replay on Altimmune’s website. With that, I will now turn the call over to Dr. Vipin Garg, Chief Executive Officer of Altimmune.

Vipin Garg: Thank you Rich, and good morning everyone. We appreciate you joining us today for a discussion of our year-end and fourth quarter 2022 financial results and business update. We are excited about the 2022 achievements with pemvidutide, our GLP-1/glucagon dual receptor agonist. Pemvidutide is in development for the treatment of obesity and NASH, two important clinical indications. Altimmune achieved key milestones in the development of pemvidutide last year, including completion of our 24-week Phase IIb NAFLD trial with compelling positive data, and the initiation of our 48-week Phase II MOMENTUM obesity trial. The 24-week data from the NAFLD trial produced a greater than 75% relative liver fat reduction at 24 weeks with over 50% of subjects achieving normalization of liver fat and significant reductions in serum ALT levels and co-related T1 relaxation times in the 1.8 milligram dose group.

Serum ALT levels and cT1 imaging are both established markers of liver inflammation. Subjects receiving pemvidutide also had a mean weight loss of 7.2%, a placebo-adjusted weight loss of 6% in subjects without diabetes at this dose. This is important because excess body weight is believed to be a major driver of NASH and its comorbidities and weight loss represents an important therapeutic goal in the treatment of these patients. We believe the robust reduction in liver fat content and markers of liver inflammation, together with meaningful weight loss will be important determinants of success in NASH, and because the great majority of people with NASH also have overweight or obesity, we believe pemvidutide is uniquely positioned to address these populations effectively.

Given these results, we plan to continue development of pemvidutide for NASH and expect to initiate a Phase IIb NASH trial in mid-2023. Scott Harris will provide more details on these trials shortly. Turning to our Phase II MOMENTUM obesity trial, we are looking forward to announcing the top line 24-week interim results of approximately 160 subjects in the second half of March. We believe that the level of weight loss consistent with the class-leading obesity drugs may be achieved at the end of 48 weeks of treatment and that potential will be reflected in the interim data readout. We also believe the tolerability profile of pemvidutide together with the absence of dose titration could translate into improved adherence to therapy and ease of administration, and that a reduction in serum and hepatic lipids and blood pressure may afford benefits to patients at risk of cardiovascular events.

In contrast to several other agents in development, reductions in blood pressure are being achieved with pemvidutide with minimal increase in heart rate. We believe these attributes could differentiate pemvidutide from other drugs in the obesity space and make an important contribution in the treatment of obesity. Finally, enrolment in the Phase II clinical trial of HepTcell in chronic hepatitis B is over 90% complete, and we expect to have a data readout in the first half of 2024. Recall that this trial is designed to show evidence of anti-viral effects against hepatitis B virus and establish its potential role in combination therapy for the treatment of this important disease. We’re excited about the progress of pemvidutide and HepTcell and the upcoming results of these ongoing trials.

With that, I’ll now turn the call over to our Chief Medical Officer, Dr. Scott Harris to discuss our data and clinical plans. Scott?

Scott Harris: Thank you Vipin, and good morning everyone. First, let me briefly review the results of our Phase IIb NAFLD trial. As Vipin noted, a 75% liver–relative liver fat reduction was achieved in the 1.8 milligram dose at 24 weeks of therapy with over 50% of subjects achieving normalization of liver fat. These effects on liver fat content were accompanied by significant reductions in corrected T1 and serum alanine aminotransferase, both markers of hepatic inflammation. cT1 is a measure of fibro-inflammatory activity in the liver, and elevated cT1 scores have been correlated with hepatic and cardiovascular events in clinical trials. Specifically an 80 millisecond reduction has been shown to correlate with a two-point improvement in NAFLD activity score on liver biopsies and up to 100% of subjects assessed by cT1 experienced an 80 millisecond or greater change in cT1.

We believe these findings could be predictive of success on biopsy end points when late stage trials are completed, as well as the likelihood of reduced hepatic and cardiovascular events when outcome trials are conducted. Next, let me tell you about the initiation of a Phase IIb NASH trial later this year. This Phase IIb biopsy-driven NASH trial will be conducted at approximately 60 sites in the U.S. with Dr. Stephen Harrison, Medical Director of Pinnacle Research and Adjunct Professor of Medicine, Oxford University, who led our 12-week NAFLD trial and 12-week extension trial, serving as the principal investigator. The key end points of this trial will be NASH resolution and fibrosis improvement after 24 weeks of treatment. We also plan to perform correlations with non-invasive tests of NASH resolution and fibrosis improvement and have discussions with the FDA about the use of these biomarkers as primary end points in Phase III.

We expect the study to commence mid-2023 and produce top line results in the first half of 2025. Now let me talk about the Phase II MOMENTUM trial of pemvidutide in obesity. The trial was designed to enroll approximately 320 subjects without diabetes but with obesity or overweight, with at least one cormorbidity. Subjects were randomized one-to-one to one-to-one, to 1.2 milligram. 1.8 milligrams, 2.4 milligrams of pemvidutide or placebo, administered weekly for 48 weeks in conjunction with diet and exercise. Based on characteristics of the fully enrolled study population, including median body weight and body mass index of approximately 101 kilograms and 36 kilograms per meter squared respectively, and median liver fat content of approximately 5% as measured in approximately 100 subjects participating in a body composition sub-study.

The study population is approximately 75% female and approximately 20% of the subjects are of Hispanic ethnicity. As we pointed out previously, the demographics of the subjects in the interim analysis may differ from those in the fully enrolled study population. In addition, unlike the Phase IIb NAFLD trial, the Phase IIb MOMENTUM trial employs end points and lifestyle modifications that are standard for a multi-center obesity trials. The primary end point of the MOMENTUM trial is the relative percent change in body weight at 48 weeks compared to baseline, with additional readouts including serum lipid profiles, cardiovascular measures, and glucose homeostasis. Dr. Lou Arrone from Weill Cornell Medical School, a leading authority in obesity and obesity clinical trials, is serving as the principal investigator.

We expect to have the results of an interim analysis of the MOMENTUM trial in the second half of March. That analysis will be comprised of approximately 160 subjects that received 24 weeks of therapy. The readout parameters are expected to include weight loss, serum lipids, adverse events, vital signs, glucose control, and study discontinuations. We have also completed enrollment in our Phase I multi-center safety trial evaluating glucose control in subjects with Type II diabetes over 12 weeks of treatment. Approximately 48 subjects were planned with a readout expected in March 2023. The purpose of this trial is to establish the safety of pemvidutide in preparation for an end of Phase II meeting with the FDA which is expected early next year.

Across the trials I have described, we are rapidly building the safety profile of pemvidutide with unblinded safety data accrued in over 200 subjects receiving pemvidutide in clinical trials at year-end 2022, and approximately 500 subjects by year-end 2023. We are also making excellent progress in our enrollment of our Phase II multi-center clinical trial of HepTcell. The trial was designed to enroll approximately 80 subjects with over 90% now enrolled. We expect to read out the results of this trial in the first half of 2024 once all subjects complete the six-month treatment period. Recall that HepTcell is an immunotherapeutic against hepatitis B virus and that the virologic effects of HepTcell are being evaluated in chronically infected patients with partial control over infection to enable the combination of HepTcell with novel direct acting antivirals as part of chronic therapy for chronic hepatitis B.

It is believed that effective treatment of chronic hepatitis B will include combination therapy of a direct acting antiviral and an immunotherapeutic agent. I will now hand the call over to Rich Eisenstadt to give an update on our third quarter financial results. Rich?

Richard Eisenstadt: Thank you Scott, and good morning again. For today’s call, I will be providing a brief update on Altimmune’s full year and fourth quarter 2022 financial and operating results. More comprehensive information will be available in our Form 10-K to be filed with the SEC later today. Altimmune ended the fourth quarter of 2022 with approximately $184.9 million of cash, cash equivalents, and short term investments compared to $190.3 million at the end of 2021. Turning to the income statement, revenue was negligible in the fourth quarter of 2022 compared to $3.3 million in the same period of 2021. The negligible negative revenue reported in 2022 was due to adjustments to cost reimbursement under the now completed BARDA contract.

Fourth quarter 2021 revenue was primarily prior period rate adjustments received in that quarter for earlier government-funded research projects. Revenue for the full year 2022 was negligible compared to $4.4 million in 2021. The revenue in 2021 was attributable to the BARDA contract and T-COVID programs, which were concluded in 2021. Research and development expenses were $19.2 million in the fourth quarter of 2022 compared to $20.2 million in the same period in 2021. Approximately $15.3 million of this total for the fourth quarter of 2022 were direct expenses for the conduct of our clinical programs, including $13.4 million in direct costs related to development activities for pemvidutide and $1.9 million in direct costs related to development activities for HepTcell.

R&D expense in the fourth quarter of 2021 included $12.4 million in direct expenses associated with the development of pemvidutide and $2.4 million in direct expenses related to HepTcell development activities, as well as approximately $2.6 million of expense to close out the AdCOVID campaign. Research and development expenses were $70.5 million in full year 2022 compared to $74.5 million in prior year. The decrease in R&D expense was primarily the result of a $35.1 million decrease in AdCOVID and T-COVID related development costs, which programs were discontinued in 2021. This included the expensing of payments made to Lonza for the construction of a manufacturing suite. In full year 2022, we incurred $46.8 million in direct costs associated with the NAFLD and MOMENTUM trials for pemvidutide and $7.5 million in direct costs associated with the HepTcell campaign.

General and administrative expenses were consistent period-over-period at $3.8 million in each of the fourth quarters of 2022 and 2021. For the full year 2022, general and administrative expenses were $17.1 million versus $15.4 million for full year 2021. The $1.7 million increase was primarily due to increased stock compensation expense as well as additional labor-related costs in 2022. Net loss for the three months ended December 31, 2022 was $21.7 million or $0.43 net loss per share compared to net loss of $23.9 million or $0.57 net loss per share for the fourth quarter of 2021. The reduction in net loss is primarily attributable to the $1 million lower research and development expenses, $3.3 million in non-recurring expense in 2021 for the recognition of the Lonza impairment loss, and the $1.3 million increase in interest income offset by the reduction in contract revenue.

Net loss for the year ended December 31, 2022 was $84.7 million or $1.81 net loss per share compared to $97.1 million or $2.35 net loss per share for the year ended December 31, 2021. The decrease in net loss was primarily attributable to the lower research and development expenses in 2022, $11.4 million in non-recurring expense in 2021 for the recognition of the Lonza impairment loss, and the $2.7 million increase in interest income offset by the reduction in contract revenue. We currently estimate that our research and development expenses for full year 2023 will be approximately $90 million. G&A expenses for the full year of 2023 are anticipated to be approximately $18 million. Approximately $10.1 million of these operating cost are for non-cash expenses, including stock compensation and depreciation and amortization.

We estimate that our existing cash funds us into the second half of 2024, which includes completion of the 48-week MOMENTUM trial and completion of enrollment of the Phase IIb biopsy NASH trial. Our current cash projection also anticipates investment in 2023 in Phase III obesity clinical drug supply, as well as funding in 2024 for the initiation of a Phase III obesity campaign. I will now turn the call back over to Vipin for his closing remarks. Vipin?

Vipin Garg: Thank you Rich. Operator, that concludes our formal remarks, and we would like to open the lines to take questions. Could you please instruct the audience on the Q&A procedure?

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Q&A Session

Operator: Our first question comes from the line of Seamus Fernandez from Guggenheim Securities.

Seamus Fernandez : Great, thanks so much for the questions. Two questions for the team here. First and foremost, if you could lay out what you would hope to see in the MOMENTUM study just from a weight loss perspective that would be–you know, from your perspective, clinically relevant and likely successful as an obesity agent at 24 weeks, perhaps even generating strategic interest or potential partnership opportunities. Would love to just hear how the team is thinking about those levels and thresholds, and perhaps comparable products that make sense in that regard. Then second, as it relates to the NASH study, can you just help us better understand how the recruitment in biopsy-driven studies at least has been progressing, or perhaps just a general sense of when your 24-week data could potentially be available? I know it’s a little bit of a crystal ball looking into the future in that regard, but just interested to better understand that. Thanks.

Vipin Garg: Yes, thanks for the question, Seamus, good morning. Let me take the first question and maybe Scott Harris can take the second one, and anybody else can chime in as well. As far as what we are looking or expecting to see at the 24-week interim readout, as we have always said that this is not about just one thing, not just about one number, it’s not just a weight loss number. You have to look at the overall target product profile to figure out where does your product fit in the long run in the obesity landscape. If you think about, at 48 weeks or at the end of treatment, approximately a year, what we are looking to achieve is about 15% to 20% weight loss. We think that’s where one needs to be in order to be competitive from a weight loss perspective.

But you also need to bring a number of other attributes, which we think our product has, so I think it’s really a combination of all those things – lack of dose titration, better tolerability, serum lipid reduction and serum lipids and so on, so all of that has to be factored into determining the overall competitive profile of the product. If you back off of that and look at 24 weeks, we would expect to be on the way to achieving that 15% to 20% weight loss, so 24 weeks, halfway there, 8% to 10% is what we’ve been talking about. We think we’ll have a competitive profile if they’re having that kind of weight loss, with all of these other attributes together with that weight loss. Scott?

Scott Harris: Hi, good morning Seamus. Regarding your second question, we think that we’re putting together a very strong plan for recruitment. We think we’ve identified a number of very good sites. As you know, Stephen Harrison is serving as the principal investigator of the trial once again. He is a great organizer and there is a very established network under his direction, so we feel very good about the recruitment plan and doing it in the United States. Regarding that, we think that we could have a readout on that 24-week end point in the first half of 2025.

Seamus Fernandez: Great, thanks. Very helpful. Then just as a final follow-up question and I’ll jump back in the queue, as we think about the prospects for 8% to 10% weight loss, I assume, just to clarify, is that placebo subtracted weight loss that you’re hoping to see, and maybe just as a little bit of incremental context, can you remind us at 24 weeks, what Wegovy and tirzepatide achieved? Thanks.